United States District Court, S.D. Indiana, Indianapolis Division
PHILADELPHIA INDEMNITY INSURANCE COMPANY, Plaintiff/Counterclaim Defendant,
WE PEBBLE POINT, LLC, Defendant/Counterclaimant.
ORDER ADOPTING THE REPORT AND RECOMMENDATION
EVANS BARKER, JUDGE.
cause is before the Court on Plaintiff Philadelphia Indemnity
Insurance Company's (“Philadelphia Ins.”)
Objection [Docket No. 58] to the Magistrate Judge's
Report and Recommendation (“R&R”) [Docket No.
55]. For the reasons detailed below we OVERRULE the
Objection and ADOPT the R&R.
facts of this case, which we summarize below, are undisputed
by the parties.
Pebble Point, LLC (“Pebble Point”) owns an
apartment complex in Indianapolis, Indiana. During the
relevant time period, Philadelphia Ins. issued Pebble Point
two materially identical insurance policies covering certain
losses at that apartment complex. In December 2012, Pebble
Point made a claim against the Policy for damages to the
apartment buildings which it alleged had been caused by an
October 2012 storm. It then made a second, similar claim for
a later storm.
investigation, Philadelphia Ins. determined that the majority
of losses claimed by Pebble Point were caused not by the
storm, in which case they would have been covered, but rather
by causes such as improper installation or maintenance of
roofing shingles, other constructions defects, and wear and
tear, none of which is covered by the Policy. As a result,
Philadelphia Ins. paid Pebble Point $6, 288.56-an amount
equal to the damages it found to have been caused by a
covered event, minus Pebble Point's $10, 000 deductible.
Pebble Point challenged Philadelphia Ins.'s conclusion,
maintaining that its covered losses ranged in the hundreds of
thousands of dollars, and it demanded that Philadelphia Ins.
participate in an appraisal proceeding as outlined in the
Ins. declined to initiate the appraisal process, contending
that the parties' dispute concerned the extent to which
the claimed losses were covered by the Policy, rather than
the “amount of loss” claimed. It then brought
this suit seeking a declaratory judgment that it had fully
satisfied its obligation under the Policy. Pebble Point filed
a motion to dismiss the Complaint on grounds that it was
entitled to enforce the appraisal provision of the Policy. We
granted Pebble Point's motion September 3, 2014, and
ordered the parties to proceed to the appraisal process as
provided in the Policy. See Dkt. 29 at 14.
Policy's Appraisal Provision provides the following:
If we and you disagree on the value of the property of the
amount of “loss, ” either may make written demand
for an appraisal of the “loss.” In this event,
each party will select an umpire. If they cannot agree,
either may request that selection be made by a judge of a
court having jurisdiction. The appraisers will state
separately the value of the property and amount of
“loss”. If they fail to agree, they will submit
their differences to the umpire. A decision agreed to by any
two will be binding. Each party will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and umpire
If there is an appraisal, we will still retain our right to
deny the claim.
Dkt. 40-2 at 37. Pebble Point and Philadelphia Ins. each
selected its own appraiser, Messrs. Lamont (Pebble Point) and
Zwolfer (Philadelphia Ins.). Each party also filed a motion
requesting the court to appoint an umpire and provided the
court with the curriculum vitae of various persons the
parties represented to be both neutral and competent. Dkts.
30, 31. On March 11, 2015, the court selected Mr. David J.
Balistreri as the Umpire for the parties' appraisal. Dkt.
March 2015, the Umpire requested that the parties'
appraisers provide him with their estimates of the damages.
The Umpire also scheduled the inspection of the apartment
complex for Thursday, May 28, 2015. About one month prior to
the inspection, on April 22, 2015, Pebble Point's
appraiser emailed to the Umpire an engineering report dated
April 15, 2015, which was prepared by Eduard Badiu of CEBB
Engineering & Testing regarding Pebble Point's
date of the May 28th inspection approached, weather forecasts
did not look promising, and given that the appraisers and the
Umpire did not want to inspect the roofs at the complex in
wet weather, they sought to reschedule the inspection for a
date when adverse weather conditions would not interfere. A
number of emails were exchanged among them to determine a
better date; of those emails, however, some went between only
the Umpire and the Philadelphia Ins. Appraiser. Indeed, the
Pebble Point Appraiser discovered that he had been excluded
from those communications only in a subsequent email that had
been forwarded to him by the Umpire in which the Umpire
informed both appraisers that he would decide on May 26, 2015
whether the inspection would go forward as scheduled on May
ten-day period leading up to the scheduled inspection,
various emails were exchanged between the appraisers and the
Umpire relating to the scope of information the Umpire would
consider in making his decision. In the first email, dated
May 19, 2015, the Umpire, after describing the information he
had received from the appraisers, requested confirmation of
the expected scope of information, including any expected
testimony that the appraisers intended to offer at the
inspection. This email states in relevant part:
Do I have all reports/documents you will be submitting for
review? I believe I have adjuster reports (one from each
side) and an engineer report from [Pebble Point's
Appraiser]. Also - are there any persons other than
yourselves who will provide testimony/opinions regarding this
matter? If so please identify them. I do not accept last
minute submission at the site. I hope to be able to settle
this the day of our site visit but have allowed some time on
Friday [May 29th] if additional paperwork is required.
Dkt. 39-1 at ¶ 5. Pebble Point's Appraiser responded
that his engineer would be attending the site visit and